Exploiting the staggered interstate banking deregulation as exogenous shocks to bank geographic expansion, we examine the causal effect of geographic diversification on systemic risk using the gravity-deregulation approach developed in Goetz, Laeven, and Levine (2013, 2016). We find that bank geographic diversification leads to higher systemic risk measured by the change in conditional value at risk (ΔCoVaR) and financial integration (Logistic(R2)). Furthermore, we document asset similarity and bank inter-connectedness as two channels to explain the documented results. The impact of geographic diversification on systemic risk is more pronounced in BHCs located in states comoving less with the U.S. aggregate economy.